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The Supreme Court Could Fundamentally Change America’s Broken Patent System

It was more than a decade ago that The New York Times exposed an anomaly that lawyers had been whispering about for some time. The sleepy, rural East Texas town of Marshall, Texas—“the self-proclaimed Pottery Capital of the World and home to the annual Fire Ant Festival”—had somehow become the nation’s hottest venue for filing high-tech patent suits.

At the time, a seemingly preposterous 9% of patent cases were being brought in the Eastern District of Texas, the federal judicial district encompassing Marshall. That was a bigger portion than any of the nation’s other 93 districts was attracting, even those that were home to major tech or commerce hubs like Silicon Valley, Chicago, Delaware, or New York.

Ten years later the situation has only deteriorated. According to legal analytics company Lex Machina, in 2015 a staggering 44.2% of new patent cases (2,541 suits) were filed in that notorious district, where defendants claim they are pressured to settle by atypical procedures and practices. Last year almost one quarter of all patent suits filed nationwide (1,119 of 4,537) were assigned to a single judge: U.S. District Judge Rodney Gilstrap, of Marshall.

To make matters worse, since 2014, according to a recent study in the Stanford Technology Law Review, more than 90% of the cases in that district have been filed by the most controversial category of patent plaintiff, those pejoratively referred to as patent trolls. These are the investment vehicles, more politely known also as “non-practicing entities” or “patent assertion entities,” that do not make or sell any products of their own, but that buy patents solely for the purpose of demanding royalties from companies that do.

Finally, there is little question that forum-shopping influences outcomes. One academic study found that patent holders prevail 58% of the time when they select the forum, but only 44% of the time when the alleged infringer does.